Consolidation fixes the debt you have. A budget prevents the debt you’d otherwise have next year.
Start with your real spending
Look at the last three months of bank and card statements. Group spending into housing, transportation, food, debt payments, kids, personal, and irregular items like car repairs and gifts.
A simple structure
- Fixed costs: mortgage, utilities, insurance, phone, transportation
- Savings and extra debt payments: paid first, automatically. See paying it off faster.
- Flexible spending: groceries, entertainment, everything else
Plan for irregular costs
Car repairs, annual insurance, birthdays and holidays often end up on credit cards. Set aside a monthly amount for them.
Build a cushion
An emergency fund is what stops the next surprise from going on a card. See emergency funds.
Check in monthly
Compare what you planned with what you spent, and adjust.
Need help?
Non-profit credit counselling agencies offer free or low-cost budgeting help.
This article is general information, not financial or legal advice. Lender requirements, rates and fees change and depend on your situation.